Warren Resources Seeks Chapter 11 Bankruptcy Protection

by San Antonio Attorney

Oil and gas producer Warren Resources Inc. sought for bankruptcy protection on June 1 after striking a deal on the terms of paying debts through equities with GSO Capital Partners, a division of Blackstone Group.

According to court papers filed by Warren, the company lenders headed by GSO Capital will exchange $248 million they are due for 82.5 percent share in the restructured company. In addition, GSO has agreed to finance the $130 million bankruptcy exit plan plus $20 million to back the Chapter 11 case.

The remaining stake in the restructured company will be shared by Claren Road Asset Management LLC, Citrus Energy and bondholders.

The reorganization agreement, which is subject to a court’s approval, is going to be the groundwork of the Chapter 11 plan.

Warren Resources, which has $545 million in liabilities and $230 million in assets, is adding to the growing number of North American gas and oil producers that have declared bankruptcy starting last year.

While standard oil prices in the United States have lately bounced back to over $40 per barrel, they remain significantly less than the $100 for every barrel producers were charging before.

After the oil and natural gas prices dropped, Warren relocated its headquarters from New York to Denver in order to cut costs. It defaulted on a $7.5 million payment which was due last Feb. 1.

Filing for bankruptcy protection is a legal way to reduce or eliminate debts. Considering that it may take years or months for a business or individual to emerge from the process, it is highly advisable to talk to a qualified San Antonio Attorney before seeking bankruptcy protection.

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